In times of economic uncertainty—even the smallest hint of it—family planning offices will begin to take a different approach with their investments. That means that hedge funds, a perennial favorite, will move to the bottom of the list when the funds are distributed.
Who will ultimately benefit? Private equities and real estate. Investors crave certainty in these times and are looking for investment opportunities that have stood the test of time, and have proven to be especially viable in the past several quarters.
Real estate, especially multifamily and commercial, provides an ROI that simply surpasses its competition. Low-interest rates, high yields and diversification of portfolio are key considerations for family offices.
In fact, NREI research on high net worth commercial real estate investment activity shows a continued healthy appetite to expand commercial real estate holdings. More than half of respondents (53%) said they expect high net worth investors to increase allocations to real estate over the next 12 months. Specifically, 35% predict an increase of 5% or more and 19% predict a slight increase of less than 5%. One-third (34%) believe allocations will remain the same, while those who think allocations will decline in the coming year are in the minority at 10%.
With family offices increasingly determining where the wealthiest families are placing their funds, it makes sense to stay in line with their thinking. This is why at CGI Strategies, real estate—with an emphasis on commercial and mixed-use properties—will be in our line of sight for the foreseeable future. Read more on this here.